This is the collective sentiment of traders and analysts who point out to the unsustained rallies that have characterized the stock market for the past three years.
Equitable Securities trader Vivencio Magnaye said the short-lived rallies could be traced to the BW stock market scam that has continued to hound the local bourse.
Magnaye said that before the unfolding of the BW stock market scandal, the daily trading volume was about P2 billion. "There was even a time when volume hit P3 billion," he said.
Best World’s stock price rose from just P1.98 to a dizzying high of P107 per share on account of insider trading and price manipulation. The shares later fell and are now trading at 50 centavos per and the company has been renamed Fairmont Holdings.
The uproar over the BW caper later resulted in an investigation by the Senate committee on banks headed by then Sen. Raul S. Roco and later on the investigation by the Senate ethics committee of Sen. Renato Cayetano about his BW shares.
Magnaye said that legislation is needed to really address the perception of the foreign investors and even local investors who are still hurting from the BW caper.
He said trading volume is now just at P600 million, a far cry from the usual trading volume of over P1 billion. This volume is not enough to support the operations of several foreign brokers many of whom have ceased operations.
The BW overhang needs to be dealt with by the combined resources of the government and the private sector so that foreign investors will really take notice, traders said.
Even the Philippine Stock Exchange (PSE) and the Securities and Exchange Commission (SEC) should come up with clear-cut rules to prevent a repeat of the BW fiasco, traders added.
Magnaye said unless the government and the private sector put their act together, the stock market’s role in raising capital for businesses that result in jobs would be severely impaired.